Roku's (ROKU) extensive user base is a valuable yet "underappreciated" advantage, positioning the video streaming platform company for monetization, UBS Securities said in a report Thursday.

With over 90 million active accounts streaming 125 billion hours in 2024, Roku has built up a "substantial" user base, and while the past decade focused on growth, the next phase dubbed Roku 2.0, is expected to focus on monetization and user engagement that will drive revenue and earnings growth, UBS said.

Growth in Connected TV advertising, increasing demand for streaming video globally, improved ad fill rates through third-party demand side platform partnerships, and easing macroeconomic pressures in the media and entertainment sector are key drivers of Roku's expansion, the report said.

UBS said it expects 12% compound annual growth rate in revenue, a 37% CAGR in earnings before interest, taxes, depreciation, and amortization, and a 50% CAGR in free cash flow over the next three years.

UBS has reinstated coverage of the company with a buy rating and a $100 price target.

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